Libya's average production
Libya accounts for about 2 per cent of the world's crude production, averaging about 1.6-million barrels of oil per day. It pumped 1.58-million barrels of oil and about 100,000 barrels of natural gas liquids per day in January, according to the International Energy Agency. Roughly 1.49-million barrels per day of this production was exported, with Europe taking most of it. Libya, the world's 12th-largest petroleum exporter, is a member of the Organization of Petroleum Exporting Countries, and is Africa's third-largest producer of oil. It holds more oil reserves than any other African country.
Europe receives 85 per cent of Libya's crude and natural gas liquids exports, and another 13 per cent heads east of Suez, according to the IEA. Libyan oil and natural gas liquids made up 23.3 per cent of Ireland's imports in 2010, 22 per cent of Italy's imports, and 21.2 per cent of Austria's imports. Libya also fulfilled 3 per cent of Chinese crude imports in 2010. Only 0.5 per cent of the United State's imports came from Libya last year, and its reliance on Libyan production has fallen every year since 2007.
Libya's natural gas heads to Italy and Spain via pipeline and tankers. The north African country also hosts five refineries, with Italy taking up 60 per cent of its jet kerosene and residual fuel oil in 2009.
Production cuts due to unrest
Libya's oil production has been roughly chopped in half to about 800,000 barrels per day, Shokri Ghanem, chairman of the state-controlled National Oil Corp., told Reuters on Tuesday. Labour is a key problem, with workers fleeing the country. Oil fields and their wells have not been damaged, Mr. Ghanem said. However, the NOC's control over marketing is now under pressure as NOC subsidiary Arabian Gulf Oil Co. (Agoco) considers setting up its own marketing division, Reuters reported. Agoco has had to slow - and in some cases shut - some of its operations.
How the production gap is being filled
Saudi Arabia, which sits on the world's largest oil reserves, has said it will step up production to fill the void created by Libya's production problems. Saudi crude tends to be heavier then Libya's, although the quality varies in both countries. Refineries will have to be tweaked to handle the different weight of oil. However, there are enough refineries capable of processing Saudi Arabia's crude that the switch should not be disruptive, said Michael Ervin, a petroleum industry consultant at Kent Marketing Services Ltd. in London, Ont.
What this means for oil prices
Prices around the world have rallied due to Libya's infighting, with crude closing at $99.69 (U.S.) in New York on Tuesday. Brent crude, the European benchmark, climbed to $115.35 Tuesday, although it has retreated since last week, when it hovered near $120 per barrel. The price of oil is rising not only because of Libyan protests, but out of fear the turmoil will spread in the Middle East, which fulfills a huge slice of global demand.
Key crude benchmarks: Understanding different oil standards
Crude oil benchmarks were first introduced in the 1980s to establish standard yardsticks for the world's most actively traded product. Crude oil quality is measured in terms of density (light to heavy) and sulphur content (sweet to sour), as classified by the American Petroleum Institute.
Brent is a light, sweet North Sea crude. Most of it is refined in Northwestern Europe, but significant volumes are shipped to the United States and Mediterranean countries. Brent Blend is used to price around two-thirds of internationally traded crude.
Russian Export Blend
Russian Export Blend, the Russian benchmark crude, is a mixture of several grades used domestically or exported. Russian Export is a medium, sour crude whose spot price is reported at Augusta, Italy, and Rotterdam, its primary delivery points.
West Texas Intermediate
West Texas Intermediate, a light, sweet crude, is the underlying commodity of the New York Mercantile Exchange oil futures contracts. Its spot price is reported at Cushing, Okla.
OPEC Reference Basket
Introduced in 2005, the OPEC Reference Basket comprises: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
Compiled by Globe staff.
Sources: Neste Oy, OPEC, Economy WatchReport Typo/Error